What Is the FCRA?
The Fair Credit Reporting Act (FCRA) is a US federal law enacted in 1970 and significantly updated in 1996. It regulates how consumer reporting agencies (CRAs) — including background check companies and credit bureaus — collect, store, and share information about individuals. The FCRA gives consumers important rights over who can access their data, how it can be used, and how to dispute inaccuracies.
If you've ever had a background check run by an employer, landlord, or financial institution in the United States, the FCRA likely applied to that process.
Who Does the FCRA Protect?
The FCRA applies to consumer reports — defined broadly as any written, oral, or electronic communication by a CRA bearing on a consumer's creditworthiness, credit standing, character, general reputation, personal characteristics, or mode of living. This covers:
- Credit reports from Equifax, Experian, and TransUnion
- Employment background checks from third-party screening companies
- Tenant screening reports
- Insurance underwriting reports
- Certain investigative reports
Note: Internal background checks conducted entirely by an employer (not using a third-party CRA) have fewer FCRA obligations.
Your Key Rights Under the FCRA
1. The Right to Consent
Before an employer or landlord can obtain a consumer report about you, they must get your written authorization. You should receive a clear disclosure — typically a separate document — explaining that a background check will be conducted.
2. The Right to Be Notified Before Adverse Action
If an employer intends to take adverse action (not hire you, deny a promotion, terminate employment) based wholly or partly on a consumer report, they must:
- Provide you with a copy of the report.
- Provide a written description of your FCRA rights.
- Give you a reasonable amount of time (typically interpreted as several business days) to review and dispute the report before finalizing the decision.
3. The Right to Dispute Inaccurate Information
You have the right to dispute any information in your consumer report that you believe is inaccurate or incomplete. Upon receiving your dispute, the CRA must:
- Investigate the disputed item — typically within 30 days.
- Contact the information source to verify accuracy.
- Remove or correct any information that cannot be verified.
- Notify you of the investigation results in writing.
4. The Right to Access Your Own Report
You're entitled to request a free copy of your consumer report once every 12 months from each of the three major credit bureaus via AnnualCreditReport.com. If adverse action has been taken against you based on a report, you have the right to a free copy of that specific report.
5. Limits on Outdated Information
The FCRA restricts how long most negative information can remain on your report:
| Information Type | Maximum Reporting Period |
|---|---|
| Most negative information | 7 years |
| Bankruptcies (Chapter 7) | 10 years |
| Criminal convictions | 7 years (some exceptions for higher-salary roles) |
| Paid tax liens | 7 years |
| Civil suits and judgments | 7 years |
Exception: For jobs paying $75,000+ per year, many of these time limits do not apply.
What Businesses Must Do to Comply
Employers and landlords using third-party background checks must:
- Only use CRAs that comply with FCRA regulations.
- Obtain proper written consent before ordering reports.
- Follow the pre-adverse and adverse action notification process.
- Properly dispose of consumer reports when no longer needed.
- Only use reports for permissible purposes (employment, tenancy, credit, etc.).
How to File a Complaint or Take Action
If you believe your FCRA rights have been violated, you have options:
- File a complaint with the Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov.
- File a complaint with the Federal Trade Commission (FTC) at ftc.gov.
- Consult a consumer protection attorney. FCRA violations can entitle you to actual damages, statutory damages, and attorney's fees if you pursue legal action.
Bottom Line
The FCRA is a powerful consumer protection law, but it only works when people know their rights. Whether you're a job seeker, tenant, or simply curious about your records, understanding the FCRA gives you the tools to challenge inaccuracies, ensure fair treatment, and hold data companies accountable.